* US jobs growth brakes in Aug, seen forcing Fed's hand
* Intel down 3 percent after warning
* Stocks: Dow down 0.06 pct, S&P 500 up 0.29 pct, Nasdaq
By Wanfeng Zhou
NEW YORK, Sept 7 (Reuters) - Disappointing U.S. jobs growth
was not enough to knock the benchmark S&P 500 off a four-year
high on Friday, as the poor figures boosted optimism that the
Federal Reserve will act to stimulate the economy next week.
The nonfarm payrolls report, which showed job growth of only
96,000 last month, came a day after bold action by Europe to
stem the debt crisis drove the S&P to its highest close since
January 2008. The Dow ended at its best level since the end of
2007 while the Nasdaq hit a 12-year high.
The payrolls data fell short of expectations for 125,000 new
jobs, particularly after a slew of strong readings on the labor
market on Thursday, setting the stage for the Fed to pump
additional money into the sluggish economy next week.
The combination of poor economic fundamentals and hopes for
central bank action left many investors in a cautious waiting
mode, a trend that is likely to continue until the Federal Open
Market Committee's (FOMC) policy meeting on Sept. 12-13.
"I think the market doesn't really know what to do. What I
suspect will happen is, for the rest of today and all through
Monday and Tuesday, the market is just going to probably go
sideways in anticipation of that FOMC meeting," said Randy
Frederick, managing director of active trading and derivatives
for Charles Schwab in Austin, Texas.
In a market that has seen little volatility of late, the S&P
500 posted its strongest one-day percentage gain since June on
Thursday, rising 2 percent.
Intel Corp cut its third-quarter revenue estimate
and withdrew its full-year forecast, saying demand for its chips
declined as customers reduced inventory and businesses bought
fewer personal computers. Shares of the world's largest
chipmaker fell 3.4 percent to $24.23.
The Dow Jones industrial average dropped 8.50 points,
or 0.06 percent, to 13,283.50. The Standard & Poor's 500 Index
gained 4.13 points, or 0.29 percent, to 1,436.25. The
Nasdaq Composite Index fell 0.42 point, or 0.01 percent,
Semiconductor shares fell after Intel's warning, with the
PHLX semiconductor index down 1.1 percent. The S&P
materials sector index rose 1.8 percent as gold prices
hit a six-month high on increased likelihood of Fed easing.
The jobs report showed the unemployment rate dropped to 8.1
percent from 8.3 percent in July, but it was largely due to
Americans giving up the search for work.
"We believe the economy is in much worse shape than is
commonly believed," said Peter Cook, chief investment officer at
Performance Trust Investment Advisors, LLC in Chicago.
"The earnings are showing that the economy is slowing.
However, there are many, many investors who appear to believe
that continued monetary stimulus will keep the stock market up
even though there's deterioration in the underlying fundamental
Shares of Pandora Media Inc fell 17 percent to $10.46
following media reports that Apple Inc was in talks to
license music for a radio service like the one Pandora operates.
The Wall Street Journal, citing people familiar with the
matter, reported that Apple wants to license music for a
custom-radio service that would work on its hardware, such as
the iPhone, iPads and Mac computers, in a bid to expand its
dominance in online music. Apple's iTunes is the largest music